BEVAN & BEVAN & ANOR
[2012] FMCAfam 370
•30 April 2012
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| BEVAN & BEVAN & ANOR | [2012] FMCAfam 370 |
| FAMILY LAW – Property – Husband deceased – financial resources and needs of wife. |
| Family Law Act 1975, ss.75(2), 79(8)(b) and 79(4) |
| Hickey & Hickey & Attorney for Commonwealth of Australia (Intervenor) (2003) FLC 93-143 Menzies v Evans (1988) FLC 91-969 Tasmanian Trustees Ltd v Gleeson (1990) FLC 92-156 Re Parrott v Public Trustee of NSW (1994) FLC 92-473 Stanford & Stanford [2012] FamCAFC 1 Konitza & Konitza (No. 2) [2009] FamCAFC 213 |
| Applicant: | MS BEVAN |
| First Respondent: | MR P BEVAN |
| Second Respondent: | MR A BEVAN (EXECUTOR AND TRUSTEE OF THE ESTATE OF THE DECEASED HUSBAND) |
| File Number: | ADC 589 of 2009 |
| Judgment of: | Cole FM |
| Hearing dates: | 9 & 10 February 2012, 15 and 20 March 2012 |
| Date of Last Submission: | 28 March 2012 |
| Delivered at: | Adelaide |
| Delivered on: | 30 April 2012 |
REPRESENTATION
| Counsel for the Applicant: | Mr R Richards |
| Solicitors for the Applicant: | Cardone & Associates |
| Counsel for the Respondents: | Di Morosini |
| Solicitors for the Respondents: | Di Morosini & Co |
ORDERS
That the net assets of the parties be divided as follows:
(a)as to 75% thereof to the Applicant wife;
(b)as to 25% thereof to the Respondent.
That in order to give effect to paragraph 1 hereof:
(a)as to the Bevan Superannuation Fund:
(i)the parties do all such things as are necessary to cause [J] Pty Ltd (“the Company”), the trustee of the Bevan Superannuation Fund (“the fund”), to require that the Company determine by resolution in general meeting that the number of Directors of the Company may be less than two, to the intent that the wife will thereafter be the sole Director of the Company;
(ii)to cause the Company as the trustee of the fund to determine that the benefits payable upon the death of the husband shall be payable by the trustee as to the whole of the Member’s Benefit Account Balance to the wife in her capacity as a “death benefits dependent”;
(iii)thereafter, the Respondent being the deceased husband’s Legal Personal Representative, will transfer to the wife or her nominee the shareholding held by or on behalf of the Estate of the deceased husband.
(b)On receipt of the money referred to in paragraph (2)(a)(ii) of these orders, the wife pay to the respondent the sum of $46,892;
(c)Subject to these orders, the wife in her capacity as the sole Director of [J] Pty Ltd do continue to offer for sale the property owned by the Company at Property R, South Australia (Certificate of Title Register Book Volume [omitted]) (“the property”) and to keep the respondent advised of:
(i)the terms and conditions on which the property is being offered for sale from time to time;
(ii)any communication between the authorised selling agent and the wife as to any progress with the sale as may occur from time to time and including any recommendation or advice from the authorised selling agent as to any change in the terms and conditions upon which the property is offered for sale;
Upon settlement of the sale of the property the net proceeds of sale (after discharging the mortgage secured against the property in favour of Commonwealth Bank of Australia, payment of all sale and settlement costs and after provision for any Capital Gains Tax arising from the sale) be disbursed as follows:
1. in payment of 75% to the wife;
2. in payment of 25% to the respondent.
Pending the sale of the property the parties shall pay the outgoings on the property including but not limited to rates, taxes, and reasonable maintenance expenses, with the outgoings to be paid as follows:
(a)from the net proceeds of any income received from the [business] on the property;
(b)in the event the property is rented, from the net proceeds of the rent received; and
(c)with the remaining outgoings to be paid by the wife as to 75% and the respondent as to 25%.
The respondent will do all things necessary to transfer to the wife the beneficial ownership of the [C] Life Policy held by the deceased Estate of the husband on the life of the wife.
Save as set out in these orders, the wife relinquish any entitlement she may have to any funds the Estate may have available for distribution following the division of the matrimonial assets pursuant to these orders.
Except as otherwise provided in these orders, the respondent and the wife are each entitled to be the sole legal and beneficial owners of all items of property including money, motor vehicles, insurances, equities, superannuation entitlements and personal effects currently in the possession or control of each of them respectively.
There be liberty to the parties to apply as to consequential orders including but not limited to the terms and conditions of the sale of the property.
IT IS NOTED that publication of this judgment under the pseudonym Bevan & Bevan & Anor is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT ADELAIDE |
ADC 589 of 2009
| MS BEVAN |
Applicant
And
| MR P BEVAN |
First Respondent
| MR A BEVAN (EXECUTOR AND TRUSTEE OF THE ESTATE OF THE DECEASED HUSBAND) |
Second Respondent
REASONS FOR JUDGMENT
These are proceedings between the wife and the estate of her late husband.
The parties are unable to reach agreement on the division of the matrimonial assets.
The husband and wife commenced cohabiting in 1980, married [in] 1981, and separated on 21 July 2007.
Proceedings were instituted by the wife on 18 February 2009.
In January 2009 the husband was diagnosed with lung cancer. The husband died [in] 2010. Some delay was encountered whilst the application for probate was processed on 23 July 2010 an order was made for the legal personal representative of the deceased respondent, Mr A Bevan, to be substituted as a party in these proceedings.
On 24 February 2011, orders were made for the filing of various documents and a further mediation conference to occur on 10 June 2011. That conference was not successful and on 14 September 2011 the matter was listed for trial in February 2012.
There is one child of the parties’ relationship namely [omitted] born [in] 1982. The wife has two children from a previous marriage namely [omitted] born [in] 1977 and [omitted] born [in] 1979. The children resided principally with the parties until they left home and became independent.
There is no significant dispute that the parties commenced cohabitation with relatively modest assets being the property settlements they received from their former spouses.
At the date of cohabitation the husband was an employee with [omitted].
The wife was the full-time carer to the two children by her previous marriage then aged three and two.
In 1992, the parties commenced a business [omitted]. This business was the main source of income for the remainder of their relationship.
Evidence
The wife relies on:
a)Her amended initiating application filed 20 January 2012;
b)Her trial affidavit filed 27 January 2012; and
c)Her statement of financial circumstances filed 27 January 2012.
The estate relies on:
a)The husband’s response filed 27 March 2009; and
b)The affidavit of Mr A Bevan (the executor) filed 27 January 2012.
In addition, the estate sought to rely on the affidavit of the husband sworn 24 March 2009 and filed 27 March 2009.
It became apparent at the conclusion of the trial that further evidence was required in respect of the superannuation fund. On 10 February 2012, an order was made that the applicant wife file and serve an affidavit of the accountant for the superannuation fund annexing a certified copy of the deed for the fund, with such affidavit to include, amongst other things:
a)The accountant’s advice as to whether the constitution of [J] Pty Ltd will permit a director, one share holder arrangement (with reference to the appropriate sections of the company’s constitution);
b)His comments on the taxation consequences, if any, of the payment of the fund direct to the wife, or the estate;
c)Whether such payment can occur on the current arrangements, and in particular clauses 2.7 and 2.12; and
d)Confirming there has been no amendments made to the deed for the superannuation fund or the constitution for [J] Pty Ltd.
The affidavit was handed to the Court on 15 March 2012 and subsequently filed on 19 March 2012.
The affidavit was not challenged by either party and the evidence of the accountant was accepted, namely that;
a)Subject to the appropriate resolution being passed, it was open for the company to be a one director one shareholder company;
b)The husband had not made any binding death benefit nomination;
c)It was possible to pay a lump sum to the wife and that lump sum would be tax free;
d)In the alternative it was possible to pay the wife by way of an income stream, however the issue whether or not tax was payable would depend on the age of both the deceased and the recipient;
e)It may be appropriate for the estate to indemnify the wife in the unlikely event that tax was assessed on the lump sum payment.
The accountant stated in the last paragraph on page 3 of his affidavit that:
“In summary, and without unduly complicating the matter, payment of the deceased husband’s death benefits from the fund in full and as a lump sum to the applicant, being a “death benefits dependent” of the deceased husband, would result in the payment of those benefits out of the fund being tax free. This would achieve the best possible overall outcome from a tax perspective, with a “balancing payment” perhaps necessary in favour of the estate in order to finalise the property settlement. Whilst the lump sum payment of death benefits to the applicant should, as discussed above, be tax free, the estate should approve an appropriate tax indemnity to the applicant; to ensure that an appropriate balance is maintained under the property settlement should unforeseen tax consequences arise.”
The parties were asked whether the accountant’s affidavit changed their position or whether the matter could proceed.
Save that counsel for the wife foreshadowed filing a comprehensive minute of orders sought, neither party wished to have the matter proceed to further hearing. Neither party considered it necessary to challenge the evidence of the accountant and he was not required for cross examination.
The Minute of Orders sought was subsequently received and Counsel agreed that no further evidence would be taken.
Orders sought
The applicant amended her position to seek an order that the matrimonial asset pool be divided such that she receives 80% with the estate to receive 20% of the net value.
The respondent amended its position to seek orders that the pool be divided with the wife to receive 70% of the net value with the respondent to receive the remainder.
The parties were unable to resolve the issues that would allow them to bridge the gap.
The law
There is no issue with this Court making orders pursuant to section 79(8)(b) of the Family Law Act 1975 (the Act). There is common ground that the Court can be satisfied that
a)The Court would have made an order but for the death of the party, and
b)It is still appropriate to make an order with respect to property
The evidence supports the positions taken by the parties.
In determining what orders should be made for the division of the matrimonial assets, I am required to take an approach that involves four inter-related steps, namely to:
a)identify and value the property, liabilities and financial resources of the parties at the date of the hearing (“the asset pool”);
b)identify and assess the contributions of the parties within the meaning of s.79(4)(a), (b) and (c) of the Family Law Act 1975 (“the Act”), and determine the contribution based entitlements of the parties expressed as a percentage of the net value of the property of the parties (“the contributions”);
c)identify and assess the relevant matters referred to in s.79(4)(d), (e), (f) and (g), including the matters referred to in s.75(2) of the Act so far as they are relevant and determine the adjustment (if any) that should be made to the contributions-based entitlements the parties established at step two (“financial resources and needs”); and
d)consider the effect of these findings and determination and resolve what order is just and equitable in all the circumstances of the case (see Hickey & Hickey & Attorney for Commonwealth of Australia (Intervenor) (2003) FLC 93-143).
I will now consider these matters.
The Pool
The parties to their credit have agreed the pool which is as follows:
| ASSETS AND LIABILITIES | Ownership | $ Value |
| [omitted] matrimonial home and block | [J] Pty Ltd | 288,000 |
| net proceeds of 4 blocks and water licence | [J] Pty Ltd | 94,539 |
| CBA #[1] | ||
| CBA #[2] | ||
| CBA #[3] | ||
| Loan [P] | 6,000 | |
| Kubota tractor | [J] Pty Ltd | 17,000 |
| Old Ford tractor | [J] Pty Ltd | 2,000 |
| [business] Income/Expenses | [J] Pty Ltd | 0 |
| Bank Accounts and loans | ||
| Home loan | [J] Pty Ltd | -53000 |
| Mastercard | Wife | |
| Cheque account (subject to update) | [I] Pty Ltd | 0 |
| Stream line account (balance life insurance proceeds $22,832) | Wife (notional) | 32,303 |
| Funds to the credit of Estate of Mr P Bevan (including | Husband's estate | 0 |
| 101 CBA shares | Wife | 5,043 |
| [C] Life policy on wife’s life and owned by husband | Husband's Estate | 4,397 |
| Superannuation | ||
| Bevan Superannuation Fund ("BSF") | ||
| BSF account # (#1 account) at 7.01.12 | Bevan Super Fund | 188,576 |
| BSF account # (#2 account) at 7.01.12 | Bevan Super Fund | 200,441 |
| [A] Super | Wife | 48,102 |
| Add backs | ||
| [A] Super | Husband’s Estate | 136,911 |
| Irrigation Management Grant (notional $20,000 – exclude) | [J] Pty Ltd | 0 |
| TOTAL | 970,312 | |
| Potential compensation claim against RVIC | 0 |
Add back
The parties have agreed that the [A] Superannuation that was cashed in by the husband, having a value of $136,911 should be added back in the pool.
There is no challenge to the evidence that the majority of the funds received by the husband were distributed between the children, his parents, and his then partner leaving a sum of $16,911.99 which was used to meet his expenses.
Contributions
The parties were in a relationship for some 27 years.
There is basic agreement that the parties commenced the relationship with assets which on the submission of Counsel for the estate amounted to a sum of approximately $13,000 either in cash in the case of the husband or an equity in real estate in the case of the wife that enabled them to assume ownership of the [F] property in which the wife was then residing.
The parties subsequently moved to [omitted] and established the [omitted] business that was the major source of their income throughout the period of the relationship.
The husband worked in the business with assistance from the wife. The wife was engaged in home duties and received some assistance from the husband.
The parties separated after some 27 years and the husband continued to operate the business.
The wife submits that the contributions between the parties should be assessed as being equal. This accords with the evidence.
This submission is not challenged by Counsel for the estate.
Financial resources and needs
The significant variation between the parties is on the issue of the financial resources and needs of the wife, the estate not having any factors for consideration under this heading.[1]
[1] Menzies v Evans (1988) FLC 91 - 969
The evidence is that the wife is aged 61 and is engaged in part-time employment for 3 days per week with [omitted].
The income received from that employment is minimal. Pursuant to orders made by consent on 25 March 2009, the wife receives $400 per week from the husband (and subsequently his Estate) being payment from [J] Proprietary Limited. It is acknowledged that the income will, on the conclusion of this matter, cease.
The wife submits that she continues to suffer significant ill health. She does not call any evidence to corroborate her position, relying on her own evidence that:
a)due to a back injury suffered some years ago she continues to have back pain which is worsening, she takes anti inflammatories and pain killers on a daily basis to control the pain and she annexes to her Affidavit (Annexure F) a copy of a report dated 19 August 2011 from Dr C, Radiologist to her General Practitioner, Dr W;
b)she suffers from arthritis in her hands and pain in the joints;
c)she takes mediation for high blood pressure which is exacerbated by stress; and
d)in addition she suffers depression and anxiety for which she takes medication. She does not state what that medication is however, her evidence is that her medical and pharmaceutical expenses average $75 per week.
Her Counsel submits that in view of the size of the asset pool which is relatively modest, the s.75(2) factors favouring the wife assume greater significance in the context of the overall settlement.
In considering the standard of living that is reasonable in all of the circumstances, the wife submits that she has a need for accommodation and her enquiries would suggest that reasonable accommodation would cost in the vicinity of $500,000. Surprisingly, after some two years in the litigation process, no evidence is provided to support this conclusion.
Counsel for the respondent questions whether the wife has done all that would be reasonably expected to ensure that she receives an appropriate income.
The wife was questioned in respect to the property in [R] that following the death of the husband was rented for a sum of approximately $200 per week for a 6 month period.
Since that time, the property has been on the market for in excess of 18 months. A limited amount of income has been received from the 6 or 7 acres that remain [omitted], however the evidence would support the conclusion that there has been no effort to re-tenant the property pending sale.
The wife’s evidence is that because of issues with the previous tenant, the property has been left on the market hoping it would sell and as a consequence it was not leased and nothing has been received.
Counsel for the wife in closing submissions submitted that the wife must take some responsibility for her circumstances in that she has not paid for example, due attention to the income that she could have received from the estate.
On the evidence, it would appear that the opportunity to receive some 18 months of rent for the property has not been pursued.
In addition, Counsel submitted that there is no evidence of any weight presented by the wife that would support a conclusion that she has been precluded from working on a full-time basis.
Counsel submits that the wife is able to support herself. The submission is that in view of the circumstances of this case a proper loading for the financial resources and needs would be in the region of 20%. Counsel submits that a loading in excess of 20% would not be just and equitable in all of the circumstances.
In respect to the wife’s needs and her evidence that she would require some $500,000 to properly house her, the wife’s Counsel conceded that the wife was offering an opinion. She was not qualified to do so and had no corroborating evidence of weight to support her. Her evidence on this aspect is therefore afforded no weight other than an indication of the price she thinks she would have to pay based on the enquires she has made.
As her Counsel submitted, the $500,000 estimate for the wife’s reasonable housing costs should be treated as an aspiration of the wife as opposed to it being ignored completely.
There is no dispute that it is clear from the evidence that the wife seeks to purchase accommodation in the city near her daughter and does not wish to return to reside in [R].
The wife’s evidence in respect of the numerous ailments that she says prevent her from being able to work full-time is less than satisfactory being no more than annexures to her Affidavit, the relevant medical experts not being made available for cross-examination and not having sworn an Affidavit.
Furthermore, there is a significant issue over the wife’s management of the [R] property and the fact that some 18 months rent has been lost due to what the wife says was her reluctance to lease the property after there were issues with the previous tenant. Exactly what those issues were remains unclear.
One thing that can be taken from that evidence however, is that the property has been listed for sale for some time and that there is no evidence of any reasonable offer being made to purchase the property to date. I will refer to this again when considering the just and equitable issues.
Whilst having regard to all of the above, I cannot ignore the fact that the wife is 61 years of age, has limited qualifications and in the event that she was able to obtain full-time employment, would still not be in receipt of a significant income. Her need for some financial support was recognised when orders were made by consent in March 2009.
There is no dispute that it is open to the wife to seek to purchase accommodation in which she can reside. It is appropriate that she have the option of not continuing to rely on rental accommodation for the remainder of her years.
She presently is in receipt of a weekly income of $464 in addition to the money she receives from the Estate pursuant to the previous orders (which will cease at the conclusion of this matter) and the dividend she receives from the Commonwealth Bank.
She is, on her evidence, continuing to rely on a 1997 Magna for her transport which after some 15 years, no doubt requires careful care and maintenance.
Counsel for the estate referred me to the recent Full Court decision of Stanford & Stanford [2012] FamCAFC 1, for some guidance on the appropriate range. In that matter the court noted there was no challenge to her Honours assessment of the contributions (namely 57.5% to the husband and 42.5% to the wife).
The husband sought an adjustment on account of the various factors set out in s.75(2). The court noted that pursuant to the orders that they proposed to make he would have the use of the property (the major asset of the pool) until his death. In their view there was no need for a further adjustment. They distinguished the circumstances of Konitza & Konitza (No.2) [2009] FamCAFC 213.
The facts in Konitza (supra) can be distinguished from this matter on several grounds including but not limited to the fact that the parties cohabited for 13 of the 72 years that they were married.
In both cases referred to above the parties were considerably older than the wife in this matter the husband in Konitza being 99 and the husband in Stanford (supra) being 87. The wife in this matter is 61 and whilst the evidence in respect of her health has been the subject of comment, there is nothing to suggest that she will not enjoy many more years of caring for her grandchildren, amongst other things.
Furthermore, in this matter the needs of the wife are acknowledged. The issue is the range.
Counsel for the respondent in closing submissions referred to the continuum of cases typified by the Tasmanian Trustees Ltd v Gleeson (1990) FLC 92 – 156 at one end and Menzies v Evans (1988) FLC 91 -969 at the other, being the matter which was addressed in the decision of Re Parrott v Public Trustee of NSW (1994) FLC 92 – 473.
The issue in these cases involves the balancing of the prima facie moral entitlement of the deceased to the share gained by the contributions made during his lifetime and the disposition of that share to his chosen beneficiaries against the consideration of not only contributions but the needs of the surviving spouse, noting the absence of the needs factors with the estate. It also involves a consideration of amongst other things, the size of the estate and the age of the surviving spouse.
The wife is at the beginning of her senior years and it is appropriate to conclude that her needs are significant. The pool is not insignificant having an agreed value of $970,312. While the evidence presented by her attracted some adverse comment, I would consider it appropriate to award an additional 25% to the wife.
Just and equitable
As stated above, the evidence is that the [R] property has been on the market for some 18 months. There is no evidence of any reasonable offer being received for the purchase of the property. The registered proprietor of the property is [J] Proprietary Limited. There is a reasonable prospect that upon the sale of the property there may well be Capital Gains Tax that will need to be paid.
There is no evidence as to when the property is likely to sell.
I do not consider it appropriate that the wife bare all of the risk in the sale of this asset. Counsel for the wife did submit from the bar table that having had discussions with the valuer, there are now grave concerns as to what exactly the property will sell for. This does not assist the Court and I do not rely on those submissions when forming a conclusion as to how the assets should be divided.
The fact remains that the property is to be sold, the husband died in 2010, the property was promptly listed for sale, and there is no definite indication, despite the parties having reached agreement in respect of their value as to when that sale is likely to be effected.
In the circumstances, I consider it appropriate that the parties’ share in the proceeds of the sale in accordance with the proportions that I decide they should each get.
Pursuant to the orders that I would propose to make, the wife would receive 75% of the net value of the matrimonial asset pool.
The agreed asset pool is $970,312 (allowing for the mortgage).
The wife, at present on the agreed asset pool, has retained or will retain the following assets which have a total net value of $89,845 being:
a)Streamline Account - $32,303;
b)CBA Shares - $5,043; and
c)[A] Super - $48,102.
d)The [C] Policy on her life $4397
The wife will be entitled to receive a number of other assets that are currently registered in the name of [J] Pty Ltd however that will be dealt with separately.
If the net proceeds of the sale of the matrimonial home and block are to be excluded from that pool, this would mean that the net value for the purposes of this exercise is less than $970,312. That is, taking out the matrimonial home and block ($288,000) and the mortgage ($53,000) the value is $735,312. Seventy five per cent of the net value of the above figure is $551,484.
Twenty five per cent of the above net value is $183,828.
The estate has had the benefit of the [A] super cashed in by the husband of $136,911.
The estate is entitled to 25% or $183,828 less the $136,911, being a figure of $46,917.
The evidence is that the Bevan Superannuation Fund can pay the amount held by it to the wife in a lump sum and that the lump sum is likely to be tax free. The Accountant does however advise that the estate should indemnify the wife in the event there are any tax liabilities. Arrangements can be made for that when considering the orders for the sale of the block.
On the basis that the wife will be able to receive the superannuation funds forthwith, I would direct that the wife pay the remaining balance to the estate within a reasonable time.
The home can be sold and the net proceeds of sale be divided with 75% to the wife and 25% to the estate.
A portion of the net proceeds can be held in an interest bearing account to meet the capital gains tax if any that would be assessed on the sale of the assets.
This would mean that the wife would receive:
Streamline account $32,303
CBA shares $5,043
Proceeds of:
Sale of Blocks $94,539
Loan [P] $6,000
Kubota tractor $17,000
Old Ford tractor $2,000
Bevan Superannuation payout $389,017
[A] Super $48,102
[C] Life policy $4,397SUB-TOTAL $598,401
Less payment to Husband $46,917
Total $551,484
The husband would receive:
[A] Proceeds $136,911
Payment from the wife $46,917
TOTAL $183,828
The wife would then have a significant sum to use for the purchase of her accommodation.
In addition the parties would receive their respective proportions of the proceeds of the sale of the [R] property. It is appropriate that pending the sale of the property that the parties each contribute in accordance with the proportions that they will receive to the outgoings on the property. That is the wife will contribute 75% with Respondent to contribute 25% to the rates, taxes and any reasonable expenses for the maintenance of the property pending sale.
Whether or not the property is rented pending sale is a matter for the parties. In the event that the property remains on the market for a further lengthy period of time I would give the parties liberty to apply as to consequential orders only which would include the terms and conditions of the sale of the property.
The wife has a small entitlement to a portion of the Estate. In the course of the proceedings, she indicated she would waive that right. The consideration of her entitlement has been on the basis that the value of the entire Estate has been included in the pool and no consideration has been given to what she would otherwise receive from the Estate. I therefore consider it appropriate that there be an order that the wife relinquish any entitlement she may have.
I would therefore for the reasons set out above pronounce the orders set out at the commencement of these reasons.
I certify that the preceding ninety-four (94) paragraphs are a true copy of the reasons for judgment of Cole FM
Date: 30 April 2012
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